Last week, Rich Preece, Director of Product Management for TurboTax, gave me a quick run through the new features of TurboTax for the 2009 tax year. Since I haven’t been using TurboTax to prepare my returns (I use an accountant because of the business), I wanted someone at TurboTax to walk me through the features that were different from last year. While the bulk of tax preparation doesn’t change from year to year, features change, move around, and in order to capture the important ones, I’ll need the help of someone who plays with it everyday.

To Rich’s credit, it was a very straightforward demonstration of the features with an explanation of why things were done a certain way (for example, why they added flagging/bookmarking) without any cheerleading or attempt to paint things more favorably.

Stimulus Package

Rich told me that the stimulus packages of the last few years affected 95% of households and some to the tune of nearly $13,000 in total available stimulus money. When you consider the various first time homebuyer credits, Making Work Pay, Making Home Affordable, etc., it’s really not surprising to learn that this year’s tax return is probably going to be one of the most convoluted and complicated ones in recent memory. TurboTax has accounted for that by adding in alerts for all of the various stimulus package items and makes a point to ask you about them.

Added Business Intelligence

TurboTax will analyze your return, as you complete it, to try to find things you may have forgotten along the way. I don’t know what they call it but I think of it as business intelligence. The software knows your situation and should take advantage of common scenarios to give you suggestions. Some examples of this feature are – if you tell TurboTax that you own a home but you don’t put down property taxes, it’ll ask you about property taxes. If you say that you started a business, it’ll check to see if you took a deduction for business mileage and medical insurance.

Bookmarking

One new feature of TurboTax is the ability to flag certain parts of your return so you know to return to them. You flag it and a listing appears in the sidebar, so you know you need to return to it.

TurboTax learned that a lot of people, to move from screen to screen, were putting in dummy data as placeholders. Sometimes you would need a social security number that you didn’t have or perhaps there were additional 1099′s you hadn’t received it. In fact, when I was preparing my 2006 taxes, I put in a placeholder figure for 1099-MISC income and promptly forgot about it! (I had tofile an amended return)

Audit Risk Results

This isn’t a new feature but it’s been revamped using data from thousands of tax returns to give you a better idea of where the red flags are in your return. Rich said the goal isn’t to scare you into not deducting something but to direct your attention to it so you don’t make a silly mistake that causes you to get audited.

Here’s the prime example of something simple that will automatically trigger an audit. If claim a dependent, you’re required to put down the social security number of that dependent. When the IRS processes returns, it records each social security number as they are claimed and automatically flags returns that claim a social security number its already seen. Let’s say you’re filing a married filing separately return, it’s not uncommon for the two filers to both claim the same dependents. If you don’t community, one of your is going to get audited. One phone call and you can avoid an audit.

Live Community

Those were the big blockbuster types of additions to the package. Another feature that I think has been fleshed out a lot more is their Live Community bulletin board system. As you prepare your return, there’s a little Live Community widget in the sidebar that has various questions (and answers) related to the section you’re in. When I used TurboTax a few years ago, this area was pretty barren and it seems like this year it’s far more active.

Anyone can answer a question but when you see a PRO label beside their name, it means they’re an accredited tax expert of some kind (either a CPA or an enrolled agent). If you see SUPERUSER, it just means they’ve been recognized by the community as having given some good answers.

I think that about covers all the biggest changes to TurboTax, I’m sure the TurboTax people will be monitoring this post so if you have any questions, leave them in the comments.

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23 Responses to “TurboTax Tax Year 2009 Review”

Almost done with my taxes using TurboTax (it helps when you know you are getting a refund)and I liked the additional information over previous years. Of course I’ve just recently gotten to where a 1040 EZ doesnt apply.

Personally, I couldn’t figure out their married filing jointly vs. separately toggle. If you click on the toggle to see what your taxes would be as a couple filing jointly vs. separately, the numbers change; however, I think what the software is doing is calculating your taxes as a couple for the joint filing and then showing only the primary persons taxes when you click married / jointly.

TurboTax was not clear in any case on how this was being handled. My best guess is that I have to rename the .tax2009 file and do two separate returns if we file separately. Clarity would be beneficial on this.

I tried the free file version of Turbo Tax this year, but did not find an intuitive/obvious method for handling the rollover of 401k-type account to a Roth IRA. I gave them information from a correct 1099-G, which clearly stated that the full amount I rolled over was taxable. Neither Turbo Tax nor H&R Block At Home included that taxable rollover income correctly. It’s very possible that my problem is user error, but after quite a bit of tinkering I only received error messages telling me the taxable amount had to equal $0.

I was very pleased with the free file version of TaxACT, which dealt with the taxable income correctly. I also felt there were more safeguards in place to ensure the return I filed was accurate (i.e. requiring figures to calculate the amount of a scholarship that was taxable instead of just asking me how much was taxable).

We used TurboTax ’09, and all I can say is- it seems too easy. We have complicated investments, and TurboTax pulled it all together, had a section for every weird little form BofA (yes, we’re trying to get away from them) threw at us, and made very helpful suggestions for deductions.

My only real gripe is that they charge an extra $19.99 fee to file your state returns for you. This is not mentioned anywhere on the packaging and felt like the old ‘bait n’ switch’. Other than that, I felt like the expense of TurboTax ’09 was worth it, given the return amount and ease of use.

Its a little shady, but I guess in the end they just tell you about how they will file your Federal taxes. When you get to the end they just throw out that little “Hey for $20 we can do your state too” Honestly, if you have your federal printed out, it would take 5 mins to transfer it to a blank state form. Most state forms ask questions like “What does line 5 on your federal form say?”

I’ve used TurboTax every year for about the last 5 years. My suggestion is that TurboTax should inform the tax paper of the deadlines for banks etc. to file their documents. I thought Jan. 31 was the date but then, after I filed my taxes Morgan Stanley sent me more documents saying that they had util Feb. 16th to file this year. Don’t know why this year is different. So, now I have to file an amendment:(.
I do have a tax question though. If TurboTax is seeing this – I received stock options-This year I sold them in May. I received a W-2 for the $8700 which I received. Morgan Stanley also sent me a 1099 which has $100,000 in Box 2. How do I file this or document this? I never received the $100,000 only the $8700 which is recognized by my W-2. I don’t know how to handle this. I use Tubo Tax Deluxe Version.
Thank you

I agree with the comment about the extra fee for state e-filing. This does sorta feel like a bait-and-switch. I thought TurboTax Deluxe came with everything needed for federal + 1 state.

I have used both TaxCut and TurboTax for several years and found TurboTax the easier to use. I did, however, have a problem importing information from my ’08 TurboTax file. In the past, this has been flawless, so it might have been something with my file. Instead, I entered everything manually – took longer, but I knew everything was correct. I should get my federal refund next week!!

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